Case #23. Filipino Merchants Insurance Co. Inc. vs.

CA and Choa Tiek Seng

G.R. No. 85141; November 28, 1989
Regalado, J.

Topic: Peril of the Sea vs. Peril of the Ship

Facts

1. The consignee of a shipment of a fishmeal insured such cargo with defendant insurance
company;
2. Under the policy of insurance, it was stated that the policy was for an “all risk under
warehouse to warehouse terms”;
3. There were 666 gunny bags of the fishmeal. Subsequently, it was found that 227 of
them were in bad order;
4. Plaintiff filed a claim against herein defendant insurance company but the latter refused
to release the claim amount, hence, plaintiff filed a complaint against the same. On the
other hand, private respondent insurance company filed a third party complaint against
the vessel and the arrastre contractor;
5. The RTC ruled in favor of the plaintiff and ordered Filipino Merchants to pay the sum
prayed for by the plaintiff;
6. The CA ruled and affirmed the decision of the RTC;

Issue: WON the insurance company is liable?

Held: Yes.

1. The Supreme held that the vendee/consignee has insurable interest in the subject
insured.
2. The Supreme Court held that:
“A perfected contract of sale even without delivery vests in the
vendee an equitable title, an existing interest over the goods
sufficient to be subject of insurance”
From the foregoing, it can gainly be said that when a person has an equitable title over a
property, such acquisition of equitable title is sufficient to be subject of insurance.

3. The Supreme Court held that:

Article 1523 of the Civil Code provides that where, in pursuance of a contract of sale,
the seller is authorized or required to send the goods to the buyer, delivery of the goods
to a carrier, whether named by the buyer or not, for the purpose of transmission to the
 buyer is deemed to be a delivery of the goods to the buyer, the exceptions to said rule
not obtaining in the present case. The Court has heretofore ruled that the delivery of
the goods on board the carrying vessels partake of the nature of actual delivery since,
from that time, the foreign buyers assumed the risks of loss of the goods and paid the
insurance premium covering them.

4. AS TO OUR TOPIC, the Marine Insurance Policy which binds the parties is an “all risks”
policy. Therefore, whether the damage or loss of the subject of the insurance policy was
due from a peril of the sea or a peril of the ship, the insurer is liable.